The erosion of trust in our institutions isn’t a recent occurrence. It has been trending slowly in this direction for a long time. The issue is that public trust has now eroded in nearly all of our social institutions such as government, business, Non-Government Organizations(NGOs), and the media. In fact the 2021 Edelman Trust Barometer, a study published annually by global communications firm Edelman, unveiled its findings recently after conducting more than 33,000 online surveys in 28 countries between October and November 2020. The firm found that public trust had eroded even further in social institutions since 2019 due to the COVID-19 pandemic, global outcry against racial injustice, and growing mistrust of what political leaders say and journalists report. Join co-hosts Rob Johnson and Eileen Rochford as we welcome special guest Harlan Loeb, a renowned reputation and crisis communications expert, formerly of Edelman, to discuss this very timely issue: what can be done to restore public trust and the price your company will pay if it cannot.
Can you hear me now Podcast Episode 2:
REFERENCES:
https://time.com/5929252/edelman-trust-barometer-2021/
https://knightfoundation.org/articles/restoring-trust-in-a-polarized-age/
https://www.theharbingergroup.com/
https://www.rj47llc.com/
https://argyleprusa.com/about-us/leadership-team/harlan-loeb/
Rob Johnson (00:19):
Welcome everyone to episode two of the "Can You Hear Me" podcast, I'm Rob Johnson, former Chicago TV news anchor and now President of the communications consulting firm, Rob Johnson Communications.
Eileen Rochford (00:32):
And I'm Eileen Rochford CEO of marketing strategy and public relations firm The Harbinger Group. We created "Can You Hear Me" because we both have a passion for communications and I mean really good communications, but we saw a growing need for C-Suite level leadership and other executives to frankly, just be better at it. And so that's why we're here with you today. And we will be joined by a man who knows all about this, former Edelman global crisis and risk lead Harlan Loeb. He's now senior managing director at Argyle USA. Harlan's a recognized expert in crisis and reputational risk management. He has extensive experience in global crisis preparedness, He has developed a reputational risk resilience model for corporate officers and their boards, has worked across nearly every industry sector in existence, representing clients such as Dow Chemical Company, Kraft GE Healthcare, Harley Davidson, CME group, Mitsubishi Corporation and SC Johnson among many, many more is licensed to the Bar in Illinois and Wisconsin.
Eileen Rochford (01:37):
He's practiced law with Godfrey & Kahn. And then as Regional Counsel for the ADL, he's also a professor of Crisis Litigation & The Court of Public Opinion at Northwestern University Law School and a lecture in Ford scholar at the Kellogg school of management. Finally, I'll just say, Harlan is someone for whom I have the utmost respect, not only for his incredible intellect and vast knowledge of everything reputation, but also for his character. And his decency is truly just one of my very favorite people. Someone I admire deeply, and I continue to learn from to this day. I'm thrilled that he's here today with us, Rob, really excited.
Rob Johnson (02:12):
We're very lucky to have you Harlan and it's great to be with you. So here's a question for you. Who do you trust? Or more directly, who don't you trust? The erosion of trust in our institutions isn't a recent occurrence. It's been trending slowly in this direction for a very long time. The issue is that public trust is eroded in our social institutions, such as government, business, non-government organizations, NGOs, and the media. In fact, the 2021 Edelman Trust Barometer, a study published annually by global communications firm Edelman, unveiled its findings recently after conducting more than 33,000 online surveys in 28 countries between October and November of 2020.
Eileen Rochford (02:53):
I gotta say Rob, the 2021 Edelman Trust Barometer findings scared the crap out of me, totally, totally honestly, to quote this report, the findings reveal, "A new era of information bankruptcy and a trust ecosystem fund able to confront it." and further it says "In the United States, 57% of us believe our country is in the midst of a cold civil war." It's also worth noting here that our trust meaning us as Americans of our own us government dropped another five points just between May 2020 and January 2021 from what was already ridiculously low level. So this is bad. I mean really bad. And here's why- when people in a society lose trust in their institutions and in each other, the nation collapses. So what we're discussing today is of the utmost importance to every one of us at every company, institution, organization, person, it's incredibly important. I just want to add, um, to put a fine point on it that the CEO of Edelman, Richard Edelman, he wrote this essay that accompanied the release of their 2020 report. And here's how he put it. "The urgent issues confronting society require a knowledgeable public able to make choices based on unbiased information- not fear, compulsion or conspiracy theories. Every institution must play its part in restoring facts to their rightful place at the center of public discourse as the essential step to emerging from information of bankruptcy." So that really puts that fine point on the severity of this current state of affairs.
Rob Johnson (04:36):
No, and you can see that it's just trending in the wrong direction. Now, before we dive deeper, let's define two terms that you may hear and have heard frequently, misinformation and disinformation. According to dictionary.com, misinformation is false information that is spread regardless of intent to mislead. So you may do it unintentionally, but you still don't mislead people. Today misinformation spreads very easily. Thanks to technology, of course, on social media users have shared story after story, without checking if they were true and many times, they are not true. Misinformation was dictionary.com's word of the year back in 2018. Misinformation was top of mind that year with governments, businesses and the broader culture grappling with how to stop dangerous misinformation, which then can become disinformation highly.
Eileen Rochford (05:22):
And disinformation is defined by dictionary.com is "false information in a hostile act of tactical political subversion." It is also used more generally to mean "deliberately misleading or biased information, manipulated narrative or facts or propaganda." So disinformation is knowingly spreading misinformation. So I think this is a perfect time to bring in my longtime friend and corporate communications expert, Mr. Harlan Loeb. Harlan, thank you for joining us today.
Harlan Loeb (05:58):
Thank you for having me. I am honored and humbled, and I'm also, I'm also a bit of a refugee of the trust barometer having been at Edelman for 11 years working on that, and it seemed like the news kept getting more challenging to use it, to put it deeper mystical.
Eileen Rochford (06:16):
I can only imagine. I mean, you've been at the heart of this, uh, data collection and analysis for a long, long time, and now you're with Argyle, but you're still seeing the data come out. I'm sure it's very concerning to you as it is to the rest of us. And I want to ask, Harlan, I'm sure you've seen this whole thing kind of coming down the pike over the past decade or more. Can you tell us from your perspective what's driving these sometimes massive disinformation campaigns and really how does all of that affect trust and distrust?
Harlan Loeb (06:51):
Sure. So, uh, yeah, it's been in the works for quite quite a long time and I use this phrase a lot, so I'll just tee it up now. And that is the erosion of the sanctity of facts. Um, facts now are, are optional and, um, you can create your own facts set with whatever tropes you feel, uh, convey your message or convey your anger or convey whatever the sentiment and emotion of the day might be. Uh, so it's, it's been good. It's been in the works for quite some time and it well predates, um, it well predates two presidencies actually. So as I, as I look at it or I start thinking about it, the, the, if you remember the movie and both of you might be too young to remember the movie, um, "Good Morning, Vietnam," in which Robin Williams...
Rob Johnson (07:43):
We're not that young, we're not that young. It's a great movie, great movie.
Harlan Loeb (07:48):
...It is an excellent movie. And if you remember, you know, obviously, uh, Robin Williams is this dynamic, uh, morning host for, for the military. And he has, if you look in the background these two, and I think they, they almost in my, my mind as I look kind of traced back in my mind, it looked like they were twins, but the fact checkers that were kind of sitting in another room and kept X-ing out what he wanted to say. So most of what he had to say was censured and, and scripted by the military so that the Vietnam war was portrayed in exactly the terms that the generals wanted to convey. And I think that that's where we, where we are right now is that we have somebody on high in many different ways is kind of scripting the narrative and instead of being one person, it's everybody.
Harlan Loeb (08:39):
And so as I look at, um, the social crisis really, that has unknown dimension now and is, has, this has consequences, the rampant kind of polarization and native populism completely really it erodes any, any notion of the sanctity of facts. Um, as you, as you well know, the social media, the deep web has profoundly divided this country. Social media is from the data that I've looked at the largest source, not only of misinformation and disinformation, but of, of pick your own facts and the addiction that we, many of us have, if not all of us, have to the web and to the kinds of things that we look at and so forth really in, in known and unknown ways is really changing our brain chemistry. And that for me is extraordinarily, uh, extraordinarily frightening. Um, and as I said, the, you know, the populous narratives really, they well proceed.
Harlan Loeb (09:43):
Our most recent president certainly aided and abetted the proliferation of exactly what we're talking about. Um, but as we've been talking about, it was 10 years in the making. And so as we look at our societal institutions, even the military, which has historically been the most trusted entity that we have is down considerably in trust. Um, and other institutions, the Supreme court, for example, is still a trusted entity on the higher end of, of the data on trust, but it's still down 23% last I checked from where it was at it's high. So we're just in a profoundly distrusting society. And as we'll talk about, look, you know, looking at the avenues for change, I think will, is incumbent upon all of us, particularly the United States, uh, and it's possible, it's within reach because I believe the majority of Americans are just kind of watching what's happening, but, but believe in the sanctity of facts and believe in civil society, but are just don't know where to go and how to activate. So I do think that there is hope, um, particularly in light of shows like this and the opportunity to discuss exactly these challenges that we're confronting that seem insurmountable. I do believe that there's hope.
Rob Johnson (11:00):
That's good to hear. And you've heard us define a couple of terms already. We also want to define mistrust and distrust, which are basically synonyms with similar meanings. We mentioned a minute ago about the erosion of trust and social institutions, such as government, business, NGOs, and the media. Let's focus on business here, and Harlan, what are the implications of distrust on businesses? How can it hurt their bottom line?
Harlan Loeb (11:26):
I, in some cases, companies that are profoundly distrusted, there's a kind of what I would call private activism. There's there's, there's individuals and organizations and population sets that will, um, look for the alternative. So if you're, let's say you're looking at big box shopping, and if you profoundly distrust, I don't want to say the name of a company, but I will, if he profoundly distrust Safeway, um, he may go to Walmart. So they, they look at, so if there's an option, obviously they'll pivot. Um, if there's an option and it's no more expensive and they'll make, they'll make a pivot. Um, what I see happening is consumers in particular, what I would call transactional trust. They trust the specific, uh, transaction or encounter that they're, that they're involved in. So for example, if they're investing in Pfizer stock, which has been doing well lately, given COVID, um, if the investment buys the stock, they don't really need to trust Pfizer.
Harlan Loeb (12:40):
They trust in the stock price. And so it's a transactional trust, which is fragile because as soon as stock goes down, they become concerned. All the Pfizer's has done very well. So I do think that there's transactional trust amongst, um, largely US, uh, and beyond, but the US, um, the US in the context of, of how, and in what ways do they still have trust. But again, as I say, it's a transactional trust, which I think is fragile, and they don't really need to pay attention to some of the hiccups in the road that many of these companies have had. Um, and what winds up happening. And this is where I think the trust and distrust collides. And I'm sure you guys, I'm certain, you guys are familiar with Purdue Pharma and all their histrionics that have going on there. So if you look at Purdue Pharma, they were making billions of dollars, essentially creating opioid addiction, um, which I see as a vivid example of the sources of distrust, which is Oxycontin
Harlan Loeb (13:44):
And some of these, these, these, these opioids are necessary and people depend on them, but when you begin to exploit it for, for, uh, material gain and you begin to, to engage in distrust and mistrust campaigns, which they certainly did, um, you're really aiding and abetting an addiction to opioids. But where, where distrust is created across, you know, we're distressed is created, um, or mistrust both, is there filling bankruptcy and absolving themselves of any penalties and protracted litigation. They have privileges these big, large companies that are larger than life have privileges in many ways, granted to them by our Congress and Senate and, and, and political leaders to engage in those kinds of things where kind of the average companies can't. Um, so you have government abled, privileges and loopholes that the rest of our society doesn't have, which is aiding and abetting, as I've said, and contributing it's seriously to distrust because there's, it's, it's not a level playing field. Um, and so, so as you look at those that example, and it's just one of many, our largest institutions, which are the backbone of at least our, our financial system, um, are played by special rules and, and, you know, live in a neighborhood that only 5% of us can ever get, can ever touch.
Eileen Rochford (15:17):
So that's, that's a really interesting observation Harlan. Um, you're starting to tell me more about the next thing that I wanted to ask you, which really is specifically about barriers to trust right now, in this day and age, kind of across the board, you know, building off of the facts and figures we shared, um, from the Edelman Trust Barometer about why people were less trusting as institutions you're starting to get at that, um, the actual barriers. Can you tell us about other barriers similar to the two that you've cited thus far? This is a very big topic, I think that there, there have to be additional barriers.
Harlan Loeb (15:57):
It's a great question. And when I think about all the time and I keep re-litigating what the right answer or, or on-ramp is. So I do think it's, yeah, it's about barriers, but it's also about the lack of greater social connectedness and durable structures for our kind of social engagement and social life. So for example, we'd have little, you know, like, uh, I don't want to say, mini communities, you know, family, friends, uh, you know, a circle of trust because of our, our we're, we're social by design as human beings. And so we have those communities and we have those relationships. So for example, um, if you look at business, you know, the Starbucks near me, there's an affinity that I have and that we all have for wherever are, and I know Rob, you don't drink coffee, but you can get their other options.
Harlan Loeb (16:51):
Um, the, uh, we have there's affinity plays all over the place. You see affinity for companies, for the people that work at a particular company. So I do think that there's hope in terms of connectedness, in what I would say, community level, uh, associations with business, you know, community connectedness with the Jewel that we have two blocks away and the people that work there. So I do think that there is connectedness and reason for hope as it relates to what I would say, mini community, um, structures, business structures, social structures, and so forth, where we have abandoned our, uh, our, our way and given shape, um, to the populists, to the, to the, to those that have their own agenda. Um, I, that continues to be disturbing, but where I see hope and where I see where I see, um, and we experienced it, you know, in client relationships and all kinds of, uh, all kinds of connectedness, whether it's clients, whether it's a social activity, whether it's, whatever it is, there are people by design, crave, concrete, meaning person, purpose, and identity, um, both individually and collectively.
Harlan Loeb (18:17):
So I do think that we do see that, um, what I'm in this, I'm a big fan of David Brooks. So I, I cite him often, um, what David Brooks has said and, and said, well, I think is that American life is really an open space and a, not an, a space not filled with individuals, um, if we're in it, and if we're failing to foster belonging, legitimacy, and trust what we are, what we're confronting as a failure in our largest institutions. Um, and if you look at that, and this is where I think one of the largest sources, if not the largest source of not only misinformation and arguably disinformation, but the biggest source of mortgaged trust, profoundly mortgaged trust, is our Congress, candidly, because they're using their bully pulpits to, uh, really play out in, in, on candid camera, if you will rub their, uh, frustrations of the, of their core constituencies.
Harlan Loeb (19:20):
Instead of working through the institutions, they use their platforms really to raise the profiles, um, in an are what I would consider an are out of control culture, and it just feeds the beast. And I think that is amongst the most dangerous sources of distrust that we have is just a Congress and a government that is profoundly distrusted, and mistrusted, um, yet people are consuming what it is that these particularly with a very divided Congress and Senate, um, they're, they're putting out tropes that are just feeding, uh, anger and populism. And if you can be angry, you must be angry. If you can't be outraged, you must be outraged. I mean that's, I think, one of the largest sources of distrust, and I do think what, where we're going to need Eileen to kind of roll back is to say, okay, let's localize this let's localize. If we begin to kind of put, put the dots on a map or put together an X, Y grid, if you localize, you'll see promise for sure.
Rob Johnson (20:25):
Well, and I think you're giving people the red meat that they want. And you're, um, while you're sitting here talking about all the problems and the problems are many, I'm glad that we're sitting here also trying to come up with solutions as well. For those of you who aren't sure what you're listening to, this is the, "Can You Hear Me?" podcast, Rob Johnson, Eileen Rochford and our special guest today, Harlan Loeb, thrilled to have him along. So I think everybody's becoming more familiar, especially those in the C-suite and leadership positions about the term ESG, which is Environmental Social Governance, which are a set of standards for a company's operations that socially conscious investors use to screen potential investments. Now it's basically investing in companies that are doing good in and for society. So, how focused, Harlan, should companies be on this now? It's a thing. And how tripped up can a company get if it's walking the walk, but it's not, it's talking the talk, but it's not walking the walk?
Harlan Loeb (21:20):
Excellent question. Um, so ESG, as I understand, it really started out as kind of an investment structure, a wall street framework, uh, for investing, um, query, whether there was, you know, bottom-up, top-down and side-to-side, really commitment and reshaping the way in which social governance, um, is constructed and construed. And I, and I do think that we're still in the state of kind of a toggle between those that really say, you know, this is the opportunity where we need to be servant leaders, and this is the opportunity and the framework to do that. And then I think there are others, particularly in the financial services space where their, their governance, if you will, their governance, um, standards and their governance commitments are rock solid. But if you look at, at, at, at retail or consumer, really, truly consumer focused and entities and others, most of them really struggle with governance and have the social part down pretty well.
Harlan Loeb (22:28):
And the environmental part, at least in what they say down pretty well. Um, and so for, uh, a concept or a framework, I should say that was really conceived as a capital markets play, um, it does hold, I think, considerable potential for boards and leadership teams to define themselves. It gives boards and leadership teams and the opportunity to take this and define purpose, uh, which is a struggle for many companies. If they say, well, what are you, what is your purpose? Why do you exist? What are you doing that has purpose? What is your social good? Um, many can say, you know, for example, we talked about Pfizer, they're providing absolutely profoundly necessary, uh, vaccines and saving lives and saving, and thankfully in the wake of COVID, uh, COVIDs erosion, uh, we are the beneficiaries of a lifesaving, lifesaving, uh, vaccine, you know, on the other hand, what are that social good?
Harlan Loeb (23:30):
That is social purpose, but what else, what other accountabilities are there in the SG framework? So I think companies are really grappling with it. And it depends, as we say, in the law, you take your planets where you find them. Um, I think some companies are, are many, in fact, one we're working with right now are really struggling, are they are, they're walking to use your phrase, Rob they're walking and talking at the same time, but not sure which is which. Um, and so I think for particularly in financial services, they're still struggling to define purpose because of the transactional nature of many financial service firms, um, and banks that would include in that. So I think we're on the right path. I, I don't think there's sufficient clarity, and I think everybody's looking for this, and it's trying to find who, who has clarity, who is the genie in the bottle that we need to pull out to help us really define an animate, what each of the E S and G mean in each of their silos individually and collectively what they mean and define that, and to help companies find their, find their Klieg light to direct them in the ways in which they need to go in order to, to really create an ESG plan.
Harlan Loeb (24:51):
That's not the investment based. The only, that is really that helps them define who they are as companies and create identity in ways, uh, which I think are absolutely critical.
Eileen Rochford (25:03):
I'm curious, Harlan, is there an example that you could give us maybe of a company or an institution that has, or have good ESG intentions, but poor execution and that the execution that was so poor reputationally?
Harlan Loeb (25:22):
Um, so again, there's a number I'm trying to avoid clients here. Um...
Rob Johnson (25:30):
So many clients who he has to take a while to like, okay, I don't want to go down the list there.
Harlan Loeb (25:35):
...there, there, there are two right now that are just struggling. They're just, they're kind of like, I don't know, I'll use the expression, "They can't find their Fanny with two hands on this." They've got one, the governance part down, then I'll use this unbelievable ironclad in governance. They've, it's an Illinois based company just to keep us in the same jurisdiction. Um, it's an Illinois based company, a wonder couple company that very few people have heard of. They don't have any real presence online. They don't there, there's just there's, so they're, they're very good at, on the governance trump, because they know it well. And they're transactionally minded. They have no idea what ENS mean and literally not. And we're, thankfully we have experts in the space, uh, here in the US and in Canada. Um, the woman in Canada is actually grew up in Baltimore.
Harlan Loeb (26:27):
So she has insights on both sides of the fence and they're struggling. They just, they've never had a construct like this. There's, there's no context for them in the E and the S park. And until recently, when they were, when, um, they were asked, the question is whether or not they would underwrite drilling in the Arctic and in Alaska where they, and they, they, they, they weren't, no one was taking out policies or anything like that. But the question, the open question was, and it's obviously a contentious question- would you support even profoundly necessary drilling, um, fuel up near Alaska and in the Antarctic? And they didn't know how to answer the question because they had no framework in the E and the S part to have a context for what defines, how they vet that question. And so we've been working with them to try to, for now, they, because they're not, they're not underwriting that.
Harlan Loeb (27:27):
And they're, they're not have been asked to they're, they're able to take, put out what I would say, a fairly prosaic holding statement, but it's something they need to grapple with. And we keep pushing them. You've got a great opportunity here because you're not on the hot seat just yet to, to, to begin to create a framework for answering that question, answering the question as to, what are, what are your guardrails for financing and, and issuing policies on those kinds of things? And it's been, uh, it's been fascinating cause they they'll engage with us, but then they get a bit overwhelmed and they kind of pushed back. And this, I say with all, all affinity for lawyers, it's being run by their general counsel, the general counsel is running, which tells you everything you need to know. And a wonderful lawyer. It has nothing to do with that is running the ESG program.
Harlan Loeb (28:18):
It shouldn't, that's, that's fine to have the lawyer involved, but they need the people with the social, you know, the social intuition, which many financial firms just don't have. There's just, that's just not in the DNA historically financial services. So it's, it's, it's a great opportunity for them because they're one of the more successful companies that no one's ever heard of. Their investors, uh, you know, that the investors are huge, you know, at State Street it's, um, Mr. Fink's Farm, I'm forgetting the huge firm in New York. Um, they've got almost half of their, of their shares are held by huge, huge companies like State Street and Vanguard and it'll come to me in a second company and all of them very committed to ESG, but reasons unknown, I mean, they all are playing in the SG space, particularly Mr. Fink, but query what it actually means.
Rob Johnson (29:17):
Well I think you bring up a great point, Harlan, because, um, I know when I'm giving advice to some of my clients and they're letting the, everything, I would always say bounce that off the lawyers. That's the smartest thing that doesn't mean let the lawyers run the whole show because, um, their sensibilities and the sensibilities of people, other people in the C-suite, um, are, are not always aligned. They're partially aligned, but they're not always aligned. So let's make sure we differentiate between handling a crisis of a company's making and reputational resilience, which would be in part weathering a disinformation storm that would be out there. So, Harlan, what does CEO need to be thinking about when it comes to these? (Loeb): Just information storm? (Johnson): Yeah. Well also, I mean, listen, I was sort of differentiating between, okay, you have a crisis, you have to deal with it. That's one thing. And, and it, it happened because of something at the company. And then there is what other people are saying about you that may not be true. The disinformation storm that you just referenced, how does a CEO, how does a leader deal with that?
Harlan Loeb (30:23):
Carefully. Um, carefully and constructively. I, um, yeah, so, right, exactly. And it's a good point. I mean, so I think the, the disinformation or misinformation, usually if they're doing, if they're, they should be the first and hopefully our many companies are the first to see kind of the, the, the, um, I guess the, the embers, you know, those are the kind of dull flame that's kind of growing. They they're the monitoring, the analytics, the kinds of things that companies are, are, are using now. And it's becoming far more affordable and far better on analytics. They all see it. They see, they see those kinds of things. Assuming that they're not the source of it themselves, which creates, that's a whole other question. And it's, unfortunately there's a lot going on in that space too, but they see it well before anybody else does. So they see kind of the, the, the, uh, the fuse kind of being lit.
Harlan Loeb (31:35):
And so I always say servant leadership, transparency, candor, and proactive engagement, particularly on bad news. And I, again, I use a litigation, uh, litigation context for that. If you're, if you're in litigation and you have the opportunity to speak first, and there is really bad news, there is, there is a, it kind of a, uh, a cancerous part of your, of your case, define it on your terms. Get it out there on your terms and define it, take the, you know, take the oxygen out of the issue, not entirely, but frame it in your terms. So if, make it clear to the, you know, to the, make it clear to the jury, make it clear in your, your early pleadings. Uh, this is a lot of lawyers just supposed to be afraid to do this, but the good ones aren't because the good, the good, good lawyers are really strategists and not will.
Harlan Loeb (32:33):
And lawyer second, strategist first, and they're outstanding. So define the issues on terms as best you can. So those companies just are afraid to do that because most CEOs- boards are a little different now- but most chairman and CEOs are absolutely petrified of the unknown. They crave predictability and certainty with such a, it's almost like your nails going into like, you know, going into rod iron. And so what we've pushed companies to do over and over again, we've had greater success, ironically, as everything is known, no matter what. So you might need to get out there because it's going to get out there. So servant leadership, transparency, accountability, define your issues. You know, as we say, in the law, candor to the tribunal, own your mistakes, um, and provide clarity and direction of what you're going to do. Here's what, and I think if you look at, um, United Airlines and I worked on this with a big team for in the early days when the, if you recall, and it was covered, sure Rob, you covered this,
Harlan Loeb (33:40):
But, um, when United Airlines on one of the flights out of Chicago had to exit a passenger who did not take well to being exited, uh, and the situation was not handled as nicely as it can. And United out of the gate, unintended, um, out of the gate, didn't handle it well. They didn't, it didn't get to Oscar Munoz quickly enough. It was handled by somebody lower in the ranks and they, they had an opportunity to own a mistake and they absolutely blew it. They then owned it in ways in which, um, servant leadership operates at its best where Oscar just owned it. And unfortunately had a heart attack in the middle of it all, uh, or a hard episode in, uh, and, uh, that's when I got involved, but over the, over the year, year and a half United just turned it around, turned it around, completely owned their mistakes, uh, were completely profoundly candid, um, and their performance up until up until COVID for all airlines, but their, and their performance, their performance and, and reputation went up.
Harlan Loeb (34:48):
I mean, it was down obviously in the wake of that, but it was, it went up higher than it was before the, before the, uh, passenger exiting. So if, if you can begin to operate and kind of owning your mistakes, don't hide behind the lawyers. Don't do any of those kinds of things, own your mistakes. You're, you're to build trust, you have to own your issues and, and own your, your challenges and be very clear and transparent about it and interact with most companies again, and their leaders are petrified because they lose control when they do that.
Eileen Rochford (35:19):
So, Harlan, I'm really curious, um, they're talking about responding how a company can respond well, when confronted with a situation that obviously they were not prepared for at all. Um, but absent to that in a normal course of business, what should companies be doing to kind of fill their trust bank and build reputational resilience in this current environment? What advice do you have on that?
Harlan Loeb (35:46):
Ask the right questions, look at your stakeholders set, both, you know, full stakeholder set. And again, for each company, it's a different nuance stakeholders means a lot of things, in a lot of different ways, but ask to engage with your, engage with your audiences, engage with your stakeholders before they, they seek you out. Um, so for example, we were talking about ESG. You know, if you were to look at that, what do they think? You know, how do it, what do they think about and whether it could be shareholders, it could be your top shareholders. Uh, what do you think about ESG? What do you think about our approach? How are we integrating strategy with risk? Is it, is this working? What do you think? Um, and not just the board, don't just rely on the board. Um, you'd look at you, look at, um, does it come, and this is really hard for companies and this there's a lot of data on this.
Harlan Loeb (36:43):
So as a side note, almost every company I know if it's doing well is in some form of transformation. Most companies don't recognize early enough that transformation, constant transformation is the, this is just the way in which our, our capital markets and, and most, I would even say small cap on up companies have to look at the world and have to look at the changing dynamics of everything we've talked about and more of our operating environment. So engaging with those that who really give you license and enable your existence and enable your profitability, enable your, um, brand value and your brand profile, what are the, what are they thinking and what, what can they contribute to your transformation, uh, efforts? And so I think I don't, I don't think companies do a particularly, shouldn't say company, most companies don't do a particularly good job of, of surveying if you will, their constituents to get a sense that nailed is of good of good governance in, in Washington, to get a sense of what their constituents think and what they need and where their sentiments are and so forth.
Harlan Loeb (37:55):
So I, that's where I think companies have to engage as citizens, if you will, as citizens, coast citizens, well, with our, you know, with our citizenry. And, um, and I just don't see that happening with this, with the dimension and kind of connectedness that needs to happen. And the irony of it all is given all the instability, the distrust, all the things that we're, we're encountering right now. And the, if you can be outraged, you must be outraged. And there's no, there's no side, but my side. Now is the time for companies to begin to engage and take, you know, and kind of, um, dial down the anger, Geiger counter. Um, so I do think we see, you know, we see good, good CEOs do that. Good CEOs, not only talk to their board, but good CEOs and Oscar Munoz used to do that, will show up at the airport and ask passengers how they're feeling about United and tell them I don't, I'm literally using the word, you know, BS out loud. I don't want that. I want you to tell me how you, what your experience has been. It's what he did in the wake of, uh, United issue.
Rob Johnson (39:05):
I'm glad you're bringing it up Harlan because, you know, the United thing was very high profile. And I think a lot of people, not only in the media, but also communications professionals were sitting there thinking, why did it take them so long to get it right? Because once they got it right, to your point, it was like, that's the way you're supposed to do it. But on the front end, they're a big corporation, which leads me sort of to my next question here. And I'm not trying to make this sound self-serving for all of us to, you know, this is not, this podcast is not an exercise in business development. It's an exercise in sort of learning best practices, but I've found and I'm sure Eileen and Harlan you've found as well, that there's a challenge, getting people and companies to be self-aware enough to understand that they need this help. They're so focused on the bottom line sometimes. And here's what we need it's right in front of me, sometimes this need, isn't something that's, you know, um, right on their plate necessarily. It should be. So how do you get these companies to understand that in this day and age, especially with social media, especially with disinformation and misinformation, that this should be a priority for company X?
Rob Johnson (40:17):
I think it, it, it kind of
Harlan Loeb (40:21):
Kind of hearkens back to what I was saying a bit earlier, I think, and eager to get your thoughts. I, I, again, I think it, it, it, it's kind of the shoe leather campaign. You know, I remember when I, I spent two years before going to law school, I'm sorry, year and a half before I went to law school, working on a campaign for a, um, a congressmen in Milwaukee that was running for US Senate. I wound up backing out when Herb Cole got into the race and he could outspend him by five, 10 fold. Um, and I just watched how he engaged. He didn't, he didn't believe in opportunity cost. He believed that if he could show up to a, uh, a, um, an event in pick a pick a place in Wisconsin, uh, like in Racine, thank you. That was very close.
Harlan Loeb (41:13):
I was thinking of the ones way up north in Wisconsin. He could, we could be in Racine, Wisconsin for the event of, uh, some organization. And then at the same time, drive up to Eau Claire, Wisconsin to be, to be with, um, Obey in, uh, Congressman Obey the next day or the next or that evening. So he didn't really know the definition of opportunity costs. So I, I look at companies, I don't care what size they are and how, how well they think they're doing and how ivory tower the chairman or CEO might find themselves, um, humility and engagement with your stakeholders. Because if, because of the point I made earlier, because we're in a constantly transforming society now, more than ever, because it's very difficult to get a sense of where your constituents are in any moment because it's fluid and it has increasingly fluid and skeptical and so forth.
Harlan Loeb (42:09):
But creating that kind of connectivity is essential. It's absolutely essential, no matter how big you are, because all it takes is a kind of Purdue Pharma type bad, uh, bet or, or thinking that they're larger, you know, larger than life, which a lot of these, a lot of these institutions unfortunately do either willingly or not is to get a sense of what your, your core constituents want and how it's fluid and what's changing. And again, I don't, I don't know that leadership teams are equipped to do that. They don't know who who's the person who does that and how do they do it, which seems very kind of basic. But I do think that there's, there's, we're always talking about, depending on what the crisis of our crisis of the decade is, is are these new, I remember, you know, new governance structures or, um, when Me Too hit they were starting.
Harlan Loeb (43:05):
And I did a ton of work in the Me Too space, bringing on new people in companies to deal with those kinds of things. So every time there was a bit of an issue, there's somebody who comes in as kind of the tsar of that challenge or risk, instead of looking more holistically at what, you know, what, what, and where are the opportunities and where are, where are we falling short? And it just, I think they've outgrown or they feel that they have outgrown any sense of kind of interconnectedness and, and engagement. And I think that's profoundly dangerous. It's going on forever, but now it's really, it's, there's a real referendum in play right now because you can't trust, and it goes back to where we started almost all societal institutions at this part at this point. So make it personal.
Rob Johnson (43:53):
Well that's, this is great stuff, Harlan, and we can't thank you enough. I mean, we've gotten into misinformation, disinformation, mistrust, distrust, reputational resilience, ESG, a lot of topics that we've talked about today. Are there, are there any final thoughts that you have, um, as we wrap this thing up today?
Harlan Loeb (44:12):
And I've been blessed and yet the two of you are part of this to have people, um, to know almost everybody I want to say everybody I know, but most of the people with whom I engage and I'm certain, it's true for the both of you, really believe in purpose, really believe in the sanctity of fast and the sanctity, of, of integrity and the sanctity of purpose. And I think the majority of Americans live their lives, whether it's sounded from a religious perspective or social perspective in principal directed ways. Uh, I think our government has done us a great disservice, but our communities for the most part, despite what's going on in neighborhoods with shootings and so forth. But the majority and people are taking positions on that. The majority of us are well-intended, want to live wholesome fulsome lives and are committed to purpose, integrity, and doing the right thing. Where we're falling short is how do we, how do we in this age of, and this is the irony, the age of greater connectivity to everything than we've ever had, we've been profoundly distracted by that connectivity because it's not the right form of connectivity.
Harlan Loeb (45:25):
It's, it's transactional connectivity, it's momentary connectivity. It's like that. And I don't even know my kids use it where you can type something out and it disappears within 30 seconds. So nobody can trace it. We live in that world and I, but I do think Snapchat. Thank you. Um, so I do think that we need to, we kind of got to dig down and build community kind of, as I say locally, because I do think that we'll, we can get beyond this, but it will take a lot of effort, hold Congress today, you know, hold Congress accountable and to hold other institutions that are just going outside the lines, if you will, um, to hold them accountable- you can't laugh. In my mind, Purdue Pharma filed for bankruptcy to avoid litigation and to avoid accountability. Somebody has got to step in there and say, no, that's not happening. We're not going to allow it. That's not a, that's not a democratic society. That's not as civil society that allows a big company like that, that's made billions at the expense of a lot of people who've died from overdosing on opioids. That's not accountability. That's, that's arguably criminal behavior.
Eileen Rochford (46:41):
Well, I appreciate and applaud your glass half full perspective here and agree with you that we can dig deep here. Um, and there's, um, a brighter future ahead, but we all have to work together, like totally agree with you. And thank you for that perspective Harlan.
Harlan Loeb (47:01):
I think we have to believe in people and I don't know what choice we have and there in my life, I've been blessed and I'm certain you have to most of the people I know are people of integrity and purpose and conviction. And, and while we're all trying to delete lives in a very, very busy, disconnected environment, I think as we look at our kind of local institutions, whether they're religious or social, or, uh, educational professional circles, there's a lot of psychic income out there. A lot of, as my dad used to say, psychic income out there to keep us encouraged and keep us focused on, on those that are doing the right thing. Those are kind of that think and engage in ways that we're used to. I think it's a profound minority of our public that's driving, it always is, that is driving much like Europe in the, you know, in the 1930s and 40s, a very small public it's driving everything. And we need to address that.
Eileen Rochford (48:05):
Yes, we absolutely do. Well, thank you. This has been an extraordinary discussion on what I think all of us agree is this vital topic for C-suite executives and business leaders. They need to consider all of this when it comes to managing their companies through this really new set of value propositions that, um, have profound implications for all of us and for every organization. I'm Eileen Rochford, CEO of The Harbinger Group. Thanks for joining us for another episode of "Can You Hear Me?"
Rob Johnson (48:36):
And I'm Rob Johnson, president of Rob Johnson communications. Coming up on the next episode of "Can You Hear Me?" diversity equity and inclusion DEI. It's become a major focus of most corporations, but if you want to weigh in, what will you have to do to satisfy your customers, your clients, and your employees? We'll dig into that on the next episode of "Can You Hear Me?" We hope you'll join us then. And we thank you for joining us today.
Eileen Rochford (49:00):
And thank you for being with us Harlan.
Harlan Loeb (49:02):
My pleasure was a privilege. Thank you.
REFERENCES:
https://time.com/5929252/edelman-trust-barometer-2021/
https://knightfoundation.org/articles/restoring-trust-in-a-polarized-age/
Can you hear me now Podcast ; Episode 2
Rob Johnson (00:19):
Welcome everyone to episode two of the "Can You Hear Me" podcast, I'm Rob Johnson, former Chicago TV news anchor and now President of the communications consulting firm, Rob Johnson Communications.
Eileen Rochford (00:32):
And I'm Eileen Rochford CEO of marketing strategy and public relations firm The Harbinger Group. We created "Can You Hear Me" because we both have a passion for communications and I mean really good communications, but we saw a growing need for C-Suite level leadership and other executives to frankly, just be better at it. And so that's why we're here with you today. And we will be joined by a man who knows all about this, former Edelman global crisis and risk lead Harlan Loeb. He's now senior managing director at Argyle USA. Harlan's a recognized expert in crisis and reputational risk management. He has extensive experience in global crisis preparedness, He has developed a reputational risk resilience model for corporate officers and their boards, has worked across nearly every industry sector in existence, representing clients such as Dow Chemical Company, Kraft GE Healthcare, Harley Davidson, CME group, Mitsubishi Corporation and SC Johnson among many, many more is licensed to the Bar in Illinois and Wisconsin.
Eileen Rochford (01:37):
He's practiced law with Godfrey & Kahn. And then as Regional Counsel for the ADL, he's also a professor of Crisis Litigation & The Court of Public Opinion at Northwestern University Law School and a lecture in Ford scholar at the Kellogg school of management. Finally, I'll just say, Harlan is someone for whom I have the utmost respect, not only for his incredible intellect and vast knowledge of everything reputation, but also for his character. And his decency is truly just one of my very favorite people. Someone I admire deeply, and I continue to learn from to this day. I'm thrilled that he's here today with us, Rob, really excited.
Rob Johnson (02:12):
We're very lucky to have you Harlan and it's great to be with you. So here's a question for you. Who do you trust? Or more directly, who don't you trust? The erosion of trust in our institutions isn't a recent occurrence. It's been trending slowly in this direction for a very long time. The issue is that public trust is eroded in our social institutions, such as government, business, non-government organizations, NGOs, and the media. In fact, the 2021 Edelman Trust Barometer, a study published annually by global communications firm Edelman, unveiled its findings recently after conducting more than 33,000 online surveys in 28 countries between October and November of 2020.
Eileen Rochford (02:53):
I gotta say Rob, the 2021 Edelman Trust Barometer findings scared the crap out of me, totally, totally honestly, to quote this report, the findings reveal, "A new era of information bankruptcy and a trust ecosystem fund able to confront it." and further it says "In the United States, 57% of us believe our country is in the midst of a cold civil war." It's also worth noting here that our trust meaning us as Americans of our own us government dropped another five points just between May 2020 and January 2021 from what was already ridiculously low level. So this is bad. I mean really bad. And here's why- when people in a society lose trust in their institutions and in each other, the nation collapses. So what we're discussing today is of the utmost importance to every one of us at every company, institution, organization, person, it's incredibly important. I just want to add, um, to put a fine point on it that the CEO of Edelman, Richard Edelman, he wrote this essay that accompanied the release of their 2020 report. And here's how he put it. "The urgent issues confronting society require a knowledgeable public able to make choices based on unbiased information- not fear, compulsion or conspiracy theories. Every institution must play its part in restoring facts to their rightful place at the center of public discourse as the essential step to emerging from information of bankruptcy." So that really puts that fine point on the severity of this current state of affairs.
Rob Johnson (04:36):
No, and you can see that it's just trending in the wrong direction. Now, before we dive deeper, let's define two terms that you may hear and have heard frequently, misinformation and disinformation. According to dictionary.com, misinformation is false information that is spread regardless of intent to mislead. So you may do it unintentionally, but you still don't mislead people. Today misinformation spreads very easily. Thanks to technology, of course, on social media users have shared story after story, without checking if they were true and many times, they are not true. Misinformation was dictionary.com's word of the year back in 2018. Misinformation was top of mind that year with governments, businesses and the broader culture grappling with how to stop dangerous misinformation, which then can become disinformation highly.
Eileen Rochford (05:22):
And disinformation is defined by dictionary.com is "false information in a hostile act of tactical political subversion." It is also used more generally to mean "deliberately misleading or biased information, manipulated narrative or facts or propaganda." So disinformation is knowingly spreading misinformation. So I think this is a perfect time to bring in my longtime friend and corporate communications expert, Mr. Harlan Loeb. Harlan, thank you for joining us today.
Harlan Loeb (05:58):
Thank you for having me. I am honored and humbled, and I'm also, I'm also a bit of a refugee of the trust barometer having been at Edelman for 11 years working on that, and it seemed like the news kept getting more challenging to use it, to put it deeper mystical.
Eileen Rochford (06:16):
I can only imagine. I mean, you've been at the heart of this, uh, data collection and analysis for a long, long time, and now you're with Argyle, but you're still seeing the data come out. I'm sure it's very concerning to you as it is to the rest of us. And I want to ask, Harlan, I'm sure you've seen this whole thing kind of coming down the pike over the past decade or more. Can you tell us from your perspective what's driving these sometimes massive disinformation campaigns and really how does all of that affect trust and distrust?
Harlan Loeb (06:51):
Sure. So, uh, yeah, it's been in the works for quite quite a long time and I use this phrase a lot, so I'll just tee it up now. And that is the erosion of the sanctity of facts. Um, facts now are, are optional and, um, you can create your own facts set with whatever tropes you feel, uh, convey your message or convey your anger or convey whatever the sentiment and emotion of the day might be. Uh, so it's, it's been good. It's been in the works for quite some time and it well predates, um, it well predates two presidencies actually. So as I, as I look at it or I start thinking about it, the, the, if you remember the movie and both of you might be too young to remember the movie, um, "Good Morning, Vietnam," in which Robin Williams...
Rob Johnson (07:43):
We're not that young, we're not that young. It's a great movie, great movie.
Harlan Loeb (07:48):
...It is an excellent movie. And if you remember, you know, obviously, uh, Robin Williams is this dynamic, uh, morning host for, for the military. And he has, if you look in the background these two, and I think they, they almost in my, my mind as I look kind of traced back in my mind, it looked like they were twins, but the fact checkers that were kind of sitting in another room and kept X-ing out what he wanted to say. So most of what he had to say was censured and, and scripted by the military so that the Vietnam war was portrayed in exactly the terms that the generals wanted to convey. And I think that that's where we, where we are right now is that we have somebody on high in many different ways is kind of scripting the narrative and instead of being one person, it's everybody.
Harlan Loeb (08:39):
And so as I look at, um, the social crisis really, that has unknown dimension now and is, has, this has consequences, the rampant kind of polarization and native populism completely really it erodes any, any notion of the sanctity of facts. Um, as you, as you well know, the social media, the deep web has profoundly divided this country. Social media is from the data that I've looked at the largest source, not only of misinformation and disinformation, but of, of pick your own facts and the addiction that we, many of us have, if not all of us, have to the web and to the kinds of things that we look at and so forth really in, in known and unknown ways is really changing our brain chemistry. And that for me is extraordinarily, uh, extraordinarily frightening. Um, and as I said, the, you know, the populous narratives really, they well proceed.
Harlan Loeb (09:43):
Our most recent president certainly aided and abetted the proliferation of exactly what we're talking about. Um, but as we've been talking about, it was 10 years in the making. And so as we look at our societal institutions, even the military, which has historically been the most trusted entity that we have is down considerably in trust. Um, and other institutions, the Supreme court, for example, is still a trusted entity on the higher end of, of the data on trust, but it's still down 23% last I checked from where it was at it's high. So we're just in a profoundly distrusting society. And as we'll talk about, look, you know, looking at the avenues for change, I think will, is incumbent upon all of us, particularly the United States, uh, and it's possible, it's within reach because I believe the majority of Americans are just kind of watching what's happening, but, but believe in the sanctity of facts and believe in civil society, but are just don't know where to go and how to activate. So I do think that there is hope, um, particularly in light of shows like this and the opportunity to discuss exactly these challenges that we're confronting that seem insurmountable. I do believe that there's hope.
Rob Johnson (11:00):
That's good to hear. And you've heard us define a couple of terms already. We also want to define mistrust and distrust, which are basically synonyms with similar meanings. We mentioned a minute ago about the erosion of trust and social institutions, such as government, business, NGOs, and the media. Let's focus on business here, and Harlan, what are the implications of distrust on businesses? How can it hurt their bottom line?
Harlan Loeb (11:26):
I, in some cases, companies that are profoundly distrusted, there's a kind of what I would call private activism. There's there's, there's individuals and organizations and population sets that will, um, look for the alternative. So if you're, let's say you're looking at big box shopping, and if you profoundly distrust, I don't want to say the name of a company, but I will, if he profoundly distrust Safeway, um, he may go to Walmart. So they, they look at, so if there's an option, obviously they'll pivot. Um, if there's an option and it's no more expensive and they'll make, they'll make a pivot. Um, what I see happening is consumers in particular, what I would call transactional trust. They trust the specific, uh, transaction or encounter that they're, that they're involved in. So for example, if they're investing in Pfizer stock, which has been doing well lately, given COVID, um, if the investment buys the stock, they don't really need to trust Pfizer.
Harlan Loeb (12:40):
They trust in the stock price. And so it's a transactional trust, which is fragile because as soon as stock goes down, they become concerned. All the Pfizer's has done very well. So I do think that there's transactional trust amongst, um, largely US, uh, and beyond, but the US, um, the US in the context of, of how, and in what ways do they still have trust. But again, as I say, it's a transactional trust, which I think is fragile, and they don't really need to pay attention to some of the hiccups in the road that many of these companies have had. Um, and what winds up happening. And this is where I think the trust and distrust collides. And I'm sure you guys, I'm certain, you guys are familiar with Purdue Pharma and all their histrionics that have going on there. So if you look at Purdue Pharma, they were making billions of dollars, essentially creating opioid addiction, um, which I see as a vivid example of the sources of distrust, which is Oxycontin
Harlan Loeb (13:44):
And some of these, these, these, these opioids are necessary and people depend on them, but when you begin to exploit it for, for, uh, material gain and you begin to, to engage in distrust and mistrust campaigns, which they certainly did, um, you're really aiding and abetting an addiction to opioids. But where, where distrust is created across, you know, we're distressed is created, um, or mistrust both, is there filling bankruptcy and absolving themselves of any penalties and protracted litigation. They have privileges these big, large companies that are larger than life have privileges in many ways, granted to them by our Congress and Senate and, and, and political leaders to engage in those kinds of things where kind of the average companies can't. Um, so you have government abled, privileges and loopholes that the rest of our society doesn't have, which is aiding and abetting, as I've said, and contributing it's seriously to distrust because there's, it's, it's not a level playing field. Um, and so, so as you look at those that example, and it's just one of many, our largest institutions, which are the backbone of at least our, our financial system, um, are played by special rules and, and, you know, live in a neighborhood that only 5% of us can ever get, can ever touch.
Eileen Rochford (15:17):
So that's, that's a really interesting observation Harlan. Um, you're starting to tell me more about the next thing that I wanted to ask you, which really is specifically about barriers to trust right now, in this day and age, kind of across the board, you know, building off of the facts and figures we shared, um, from the Edelman Trust Barometer about why people were less trusting as institutions you're starting to get at that, um, the actual barriers. Can you tell us about other barriers similar to the two that you've cited thus far? This is a very big topic, I think that there, there have to be additional barriers.
Harlan Loeb (15:57):
It's a great question. And when I think about all the time and I keep re-litigating what the right answer or, or on-ramp is. So I do think it's, yeah, it's about barriers, but it's also about the lack of greater social connectedness and durable structures for our kind of social engagement and social life. So for example, we'd have little, you know, like, uh, I don't want to say, mini communities, you know, family, friends, uh, you know, a circle of trust because of our, our we're, we're social by design as human beings. And so we have those communities and we have those relationships. So for example, um, if you look at business, you know, the Starbucks near me, there's an affinity that I have and that we all have for wherever are, and I know Rob, you don't drink coffee, but you can get their other options.
Harlan Loeb (16:51):
Um, the, uh, we have there's affinity plays all over the place. You see affinity for companies, for the people that work at a particular company. So I do think that there's hope in terms of connectedness, in what I would say, community level, uh, associations with business, you know, community connectedness with the Jewel that we have two blocks away and the people that work there. So I do think that there is connectedness and reason for hope as it relates to what I would say, mini community, um, structures, business structures, social structures, and so forth, where we have abandoned our, uh, our, our way and given shape, um, to the populists, to the, to the, to those that have their own agenda. Um, I, that continues to be disturbing, but where I see hope and where I see where I see, um, and we experienced it, you know, in client relationships and all kinds of, uh, all kinds of connectedness, whether it's clients, whether it's a social activity, whether it's, whatever it is, there are people by design, crave, concrete, meaning person, purpose, and identity, um, both individually and collectively.
Harlan Loeb (18:17):
So I do think that we do see that, um, what I'm in this, I'm a big fan of David Brooks. So I, I cite him often, um, what David Brooks has said and, and said, well, I think is that American life is really an open space and a, not an, a space not filled with individuals, um, if we're in it, and if we're failing to foster belonging, legitimacy, and trust what we are, what we're confronting as a failure in our largest institutions. Um, and if you look at that, and this is where I think one of the largest sources, if not the largest source of not only misinformation and arguably disinformation, but the biggest source of mortgaged trust, profoundly mortgaged trust, is our Congress, candidly, because they're using their bully pulpits to, uh, really play out in, in, on candid camera, if you will rub their, uh, frustrations of the, of their core constituencies.
Harlan Loeb (19:20):
Instead of working through the institutions, they use their platforms really to raise the profiles, um, in an are what I would consider an are out of control culture, and it just feeds the beast. And I think that is amongst the most dangerous sources of distrust that we have is just a Congress and a government that is profoundly distrusted, and mistrusted, um, yet people are consuming what it is that these particularly with a very divided Congress and Senate, um, they're, they're putting out tropes that are just feeding, uh, anger and populism. And if you can be angry, you must be angry. If you can't be outraged, you must be outraged. I mean that's, I think, one of the largest sources of distrust, and I do think what, where we're going to need Eileen to kind of roll back is to say, okay, let's localize this let's localize. If we begin to kind of put, put the dots on a map or put together an X, Y grid, if you localize, you'll see promise for sure.
Rob Johnson (20:25):
Well, and I think you're giving people the red meat that they want. And you're, um, while you're sitting here talking about all the problems and the problems are many, I'm glad that we're sitting here also trying to come up with solutions as well. For those of you who aren't sure what you're listening to, this is the, "Can You Hear Me?" podcast, Rob Johnson, Eileen Rochford and our special guest today, Harlan Loeb, thrilled to have him along. So I think everybody's becoming more familiar, especially those in the C-suite and leadership positions about the term ESG, which is Environmental Social Governance, which are a set of standards for a company's operations that socially conscious investors use to screen potential investments. Now it's basically investing in companies that are doing good in and for society. So, how focused, Harlan, should companies be on this now? It's a thing. And how tripped up can a company get if it's walking the walk, but it's not, it's talking the talk, but it's not walking the walk?
Harlan Loeb (21:20):
Excellent question. Um, so ESG, as I understand, it really started out as kind of an investment structure, a wall street framework, uh, for investing, um, query, whether there was, you know, bottom-up, top-down and side-to-side, really commitment and reshaping the way in which social governance, um, is constructed and construed. And I, and I do think that we're still in the state of kind of a toggle between those that really say, you know, this is the opportunity where we need to be servant leaders, and this is the opportunity and the framework to do that. And then I think there are others, particularly in the financial services space where their, their governance, if you will, their governance, um, standards and their governance commitments are rock solid. But if you look at, at, at, at retail or consumer, really, truly consumer focused and entities and others, most of them really struggle with governance and have the social part down pretty well.
Harlan Loeb (22:28):
And the environmental part, at least in what they say down pretty well. Um, and so for, uh, a concept or a framework, I should say that was really conceived as a capital markets play, um, it does hold, I think, considerable potential for boards and leadership teams to define themselves. It gives boards and leadership teams and the opportunity to take this and define purpose, uh, which is a struggle for many companies. If they say, well, what are you, what is your purpose? Why do you exist? What are you doing that has purpose? What is your social good? Um, many can say, you know, for example, we talked about Pfizer, they're providing absolutely profoundly necessary, uh, vaccines and saving lives and saving, and thankfully in the wake of COVID, uh, COVIDs erosion, uh, we are the beneficiaries of a lifesaving, lifesaving, uh, vaccine, you know, on the other hand, what are that social good?
Harlan Loeb (23:30):
That is social purpose, but what else, what other accountabilities are there in the SG framework? So I think companies are really grappling with it. And it depends, as we say, in the law, you take your planets where you find them. Um, I think some companies are, are many, in fact, one we're working with right now are really struggling, are they are, they're walking to use your phrase, Rob they're walking and talking at the same time, but not sure which is which. Um, and so I think for particularly in financial services, they're still struggling to define purpose because of the transactional nature of many financial service firms, um, and banks that would include in that. So I think we're on the right path. I, I don't think there's sufficient clarity, and I think everybody's looking for this, and it's trying to find who, who has clarity, who is the genie in the bottle that we need to pull out to help us really define an animate, what each of the E S and G mean in each of their silos individually and collectively what they mean and define that, and to help companies find their, find their Klieg light to direct them in the ways in which they need to go in order to, to really create an ESG plan.
Harlan Loeb (24:51):
That's not the investment based. The only, that is really that helps them define who they are as companies and create identity in ways, uh, which I think are absolutely critical.
Eileen Rochford (25:03):
I'm curious, Harlan, is there an example that you could give us maybe of a company or an institution that has, or have good ESG intentions, but poor execution and that the execution that was so poor reputationally?
Harlan Loeb (25:22):
Um, so again, there's a number I'm trying to avoid clients here. Um...
Rob Johnson (25:30):
So many clients who he has to take a while to like, okay, I don't want to go down the list there.
Harlan Loeb (25:35):
...there, there, there are two right now that are just struggling. They're just, they're kind of like, I don't know, I'll use the expression, "They can't find their Fanny with two hands on this." They've got one, the governance part down, then I'll use this unbelievable ironclad in governance. They've, it's an Illinois based company just to keep us in the same jurisdiction. Um, it's an Illinois based company, a wonder couple company that very few people have heard of. They don't have any real presence online. They don't there, there's just there's, so they're, they're very good at, on the governance trump, because they know it well. And they're transactionally minded. They have no idea what ENS mean and literally not. And we're, thankfully we have experts in the space, uh, here in the US and in Canada. Um, the woman in Canada is actually grew up in Baltimore.
Harlan Loeb (26:27):
So she has insights on both sides of the fence and they're struggling. They just, they've never had a construct like this. There's, there's no context for them in the E and the S park. And until recently, when they were, when, um, they were asked, the question is whether or not they would underwrite drilling in the Arctic and in Alaska where they, and they, they, they, they weren't, no one was taking out policies or anything like that. But the question, the open question was, and it's obviously a contentious question- would you support even profoundly necessary drilling, um, fuel up near Alaska and in the Antarctic? And they didn't know how to answer the question because they had no framework in the E and the S part to have a context for what defines, how they vet that question. And so we've been working with them to try to, for now, they, because they're not, they're not underwriting that.
Harlan Loeb (27:27):
And they're, they're not have been asked to they're, they're able to take, put out what I would say, a fairly prosaic holding statement, but it's something they need to grapple with. And we keep pushing them. You've got a great opportunity here because you're not on the hot seat just yet to, to, to begin to create a framework for answering that question, answering the question as to, what are, what are your guardrails for financing and, and issuing policies on those kinds of things? And it's been, uh, it's been fascinating cause they they'll engage with us, but then they get a bit overwhelmed and they kind of pushed back. And this, I say with all, all affinity for lawyers, it's being run by their general counsel, the general counsel is running, which tells you everything you need to know. And a wonderful lawyer. It has nothing to do with that is running the ESG program.
Harlan Loeb (28:18):
It shouldn't, that's, that's fine to have the lawyer involved, but they need the people with the social, you know, the social intuition, which many financial firms just don't have. There's just, that's just not in the DNA historically financial services. So it's, it's, it's a great opportunity for them because they're one of the more successful companies that no one's ever heard of. Their investors, uh, you know, that the investors are huge, you know, at State Street it's, um, Mr. Fink's Farm, I'm forgetting the huge firm in New York. Um, they've got almost half of their, of their shares are held by huge, huge companies like State Street and Vanguard and it'll come to me in a second company and all of them very committed to ESG, but reasons unknown, I mean, they all are playing in the SG space, particularly Mr. Fink, but query what it actually means.
Rob Johnson (29:17):
Well I think you bring up a great point, Harlan, because, um, I know when I'm giving advice to some of my clients and they're letting the, everything, I would always say bounce that off the lawyers. That's the smartest thing that doesn't mean let the lawyers run the whole show because, um, their sensibilities and the sensibilities of people, other people in the C-suite, um, are, are not always aligned. They're partially aligned, but they're not always aligned. So let's make sure we differentiate between handling a crisis of a company's making and reputational resilience, which would be in part weathering a disinformation storm that would be out there. So, Harlan, what does CEO need to be thinking about when it comes to these? (Loeb): Just information storm? (Johnson): Yeah. Well also, I mean, listen, I was sort of differentiating between, okay, you have a crisis, you have to deal with it. That's one thing. And, and it, it happened because of something at the company. And then there is what other people are saying about you that may not be true. The disinformation storm that you just referenced, how does a CEO, how does a leader deal with that?
Harlan Loeb (30:23):
Carefully. Um, carefully and constructively. I, um, yeah, so, right, exactly. And it's a good point. I mean, so I think the, the disinformation or misinformation, usually if they're doing, if they're, they should be the first and hopefully our many companies are the first to see kind of the, the, the, um, I guess the, the embers, you know, those are the kind of dull flame that's kind of growing. They they're the monitoring, the analytics, the kinds of things that companies are, are, are using now. And it's becoming far more affordable and far better on analytics. They all see it. They see, they see those kinds of things. Assuming that they're not the source of it themselves, which creates, that's a whole other question. And it's, unfortunately there's a lot going on in that space too, but they see it well before anybody else does. So they see kind of the, the, the, uh, the fuse kind of being lit.
Harlan Loeb (31:35):
And so I always say servant leadership, transparency, candor, and proactive engagement, particularly on bad news. And I, again, I use a litigation, uh, litigation context for that. If you're, if you're in litigation and you have the opportunity to speak first, and there is really bad news, there is, there is a, it kind of a, uh, a cancerous part of your, of your case, define it on your terms. Get it out there on your terms and define it, take the, you know, take the oxygen out of the issue, not entirely, but frame it in your terms. So if, make it clear to the, you know, to the, make it clear to the jury, make it clear in your, your early pleadings. Uh, this is a lot of lawyers just supposed to be afraid to do this, but the good ones aren't because the good, the good, good lawyers are really strategists and not will.
Harlan Loeb (32:33):
And lawyer second, strategist first, and they're outstanding. So define the issues on terms as best you can. So those companies just are afraid to do that because most CEOs- boards are a little different now- but most chairman and CEOs are absolutely petrified of the unknown. They crave predictability and certainty with such a, it's almost like your nails going into like, you know, going into rod iron. And so what we've pushed companies to do over and over again, we've had greater success, ironically, as everything is known, no matter what. So you might need to get out there because it's going to get out there. So servant leadership, transparency, accountability, define your issues. You know, as we say, in the law, candor to the tribunal, own your mistakes, um, and provide clarity and direction of what you're going to do. Here's what, and I think if you look at, um, United Airlines and I worked on this with a big team for in the early days when the, if you recall, and it was covered, sure Rob, you covered this,
Harlan Loeb (33:40):
But, um, when United Airlines on one of the flights out of Chicago had to exit a passenger who did not take well to being exited, uh, and the situation was not handled as nicely as it can. And United out of the gate, unintended, um, out of the gate, didn't handle it well. They didn't, it didn't get to Oscar Munoz quickly enough. It was handled by somebody lower in the ranks and they, they had an opportunity to own a mistake and they absolutely blew it. They then owned it in ways in which, um, servant leadership operates at its best where Oscar just owned it. And unfortunately had a heart attack in the middle of it all, uh, or a hard episode in, uh, and, uh, that's when I got involved, but over the, over the year, year and a half United just turned it around, turned it around, completely owned their mistakes, uh, were completely profoundly candid, um, and their performance up until up until COVID for all airlines, but their, and their performance, their performance and, and reputation went up.
Harlan Loeb (34:48):
I mean, it was down obviously in the wake of that, but it was, it went up higher than it was before the, before the, uh, passenger exiting. So if, if you can begin to operate and kind of owning your mistakes, don't hide behind the lawyers. Don't do any of those kinds of things, own your mistakes. You're, you're to build trust, you have to own your issues and, and own your, your challenges and be very clear and transparent about it and interact with most companies again, and their leaders are petrified because they lose control when they do that.
Eileen Rochford (35:19):
So, Harlan, I'm really curious, um, they're talking about responding how a company can respond well, when confronted with a situation that obviously they were not prepared for at all. Um, but absent to that in a normal course of business, what should companies be doing to kind of fill their trust bank and build reputational resilience in this current environment? What advice do you have on that?
Harlan Loeb (35:46):
Ask the right questions, look at your stakeholders set, both, you know, full stakeholder set. And again, for each company, it's a different nuance stakeholders means a lot of things, in a lot of different ways, but ask to engage with your, engage with your audiences, engage with your stakeholders before they, they seek you out. Um, so for example, we were talking about ESG. You know, if you were to look at that, what do they think? You know, how do it, what do they think about and whether it could be shareholders, it could be your top shareholders. Uh, what do you think about ESG? What do you think about our approach? How are we integrating strategy with risk? Is it, is this working? What do you think? Um, and not just the board, don't just rely on the board. Um, you'd look at you, look at, um, does it come, and this is really hard for companies and this there's a lot of data on this.
Harlan Loeb (36:43):
So as a side note, almost every company I know if it's doing well is in some form of transformation. Most companies don't recognize early enough that transformation, constant transformation is the, this is just the way in which our, our capital markets and, and most, I would even say small cap on up companies have to look at the world and have to look at the changing dynamics of everything we've talked about and more of our operating environment. So engaging with those that who really give you license and enable your existence and enable your profitability, enable your, um, brand value and your brand profile, what are the, what are they thinking and what, what can they contribute to your transformation, uh, efforts? And so I think I don't, I don't think companies do a particularly, shouldn't say company, most companies don't do a particularly good job of, of surveying if you will, their constituents to get a sense that nailed is of good of good governance in, in Washington, to get a sense of what their constituents think and what they need and where their sentiments are and so forth.
Harlan Loeb (37:55):
So I, that's where I think companies have to engage as citizens, if you will, as citizens, coast citizens, well, with our, you know, with our citizenry. And, um, and I just don't see that happening with this, with the dimension and kind of connectedness that needs to happen. And the irony of it all is given all the instability, the distrust, all the things that we're, we're encountering right now. And the, if you can be outraged, you must be outraged. And there's no, there's no side, but my side. Now is the time for companies to begin to engage and take, you know, and kind of, um, dial down the anger, Geiger counter. Um, so I do think we see, you know, we see good, good CEOs do that. Good CEOs, not only talk to their board, but good CEOs and Oscar Munoz used to do that, will show up at the airport and ask passengers how they're feeling about United and tell them I don't, I'm literally using the word, you know, BS out loud. I don't want that. I want you to tell me how you, what your experience has been. It's what he did in the wake of, uh, United issue.
Rob Johnson (39:05):
I'm glad you're bringing it up Harlan because, you know, the United thing was very high profile. And I think a lot of people, not only in the media, but also communications professionals were sitting there thinking, why did it take them so long to get it right? Because once they got it right, to your point, it was like, that's the way you're supposed to do it. But on the front end, they're a big corporation, which leads me sort of to my next question here. And I'm not trying to make this sound self-serving for all of us to, you know, this is not, this podcast is not an exercise in business development. It's an exercise in sort of learning best practices, but I've found and I'm sure Eileen and Harlan you've found as well, that there's a challenge, getting people and companies to be self-aware enough to understand that they need this help. They're so focused on the bottom line sometimes. And here's what we need it's right in front of me, sometimes this need, isn't something that's, you know, um, right on their plate necessarily. It should be. So how do you get these companies to understand that in this day and age, especially with social media, especially with disinformation and misinformation, that this should be a priority for company X?
Rob Johnson (40:17):
I think it, it, it kind of
Harlan Loeb (40:21):
Kind of hearkens back to what I was saying a bit earlier, I think, and eager to get your thoughts. I, I, again, I think it, it, it, it's kind of the shoe leather campaign. You know, I remember when I, I spent two years before going to law school, I'm sorry, year and a half before I went to law school, working on a campaign for a, um, a congressmen in Milwaukee that was running for US Senate. I wound up backing out when Herb Cole got into the race and he could outspend him by five, 10 fold. Um, and I just watched how he engaged. He didn't, he didn't believe in opportunity cost. He believed that if he could show up to a, uh, a, um, an event in pick a pick a place in Wisconsin, uh, like in Racine, thank you. That was very close.
Harlan Loeb (41:13):
I was thinking of the ones way up north in Wisconsin. He could, we could be in Racine, Wisconsin for the event of, uh, some organization. And then at the same time, drive up to Eau Claire, Wisconsin to be, to be with, um, Obey in, uh, Congressman Obey the next day or the next or that evening. So he didn't really know the definition of opportunity costs. So I, I look at companies, I don't care what size they are and how, how well they think they're doing and how ivory tower the chairman or CEO might find themselves, um, humility and engagement with your stakeholders. Because if, because of the point I made earlier, because we're in a constantly transforming society now, more than ever, because it's very difficult to get a sense of where your constituents are in any moment because it's fluid and it has increasingly fluid and skeptical and so forth.
Harlan Loeb (42:09):
But creating that kind of connectivity is essential. It's absolutely essential, no matter how big you are, because all it takes is a kind of Purdue Pharma type bad, uh, bet or, or thinking that they're larger, you know, larger than life, which a lot of these, a lot of these institutions unfortunately do either willingly or not is to get a sense of what your, your core constituents want and how it's fluid and what's changing. And again, I don't, I don't know that leadership teams are equipped to do that. They don't know who who's the person who does that and how do they do it, which seems very kind of basic. But I do think that there's, there's, we're always talking about, depending on what the crisis of our crisis of the decade is, is are these new, I remember, you know, new governance structures or, um, when Me Too hit they were starting.
Harlan Loeb (43:05):
And I did a ton of work in the Me Too space, bringing on new people in companies to deal with those kinds of things. So every time there was a bit of an issue, there's somebody who comes in as kind of the tsar of that challenge or risk, instead of looking more holistically at what, you know, what, what, and where are the opportunities and where are, where are we falling short? And it just, I think they've outgrown or they feel that they have outgrown any sense of kind of interconnectedness and, and engagement. And I think that's profoundly dangerous. It's going on forever, but now it's really, it's, there's a real referendum in play right now because you can't trust, and it goes back to where we started almost all societal institutions at this part at this point. So make it personal.
Rob Johnson (43:53):
Well that's, this is great stuff, Harlan, and we can't thank you enough. I mean, we've gotten into misinformation, disinformation, mistrust, distrust, reputational resilience, ESG, a lot of topics that we've talked about today. Are there, are there any final thoughts that you have, um, as we wrap this thing up today?
Harlan Loeb (44:12):
And I've been blessed and yet the two of you are part of this to have people, um, to know almost everybody I want to say everybody I know, but most of the people with whom I engage and I'm certain, it's true for the both of you, really believe in purpose, really believe in the sanctity of fast and the sanctity, of, of integrity and the sanctity of purpose. And I think the majority of Americans live their lives, whether it's sounded from a religious perspective or social perspective in principal directed ways. Uh, I think our government has done us a great disservice, but our communities for the most part, despite what's going on in neighborhoods with shootings and so forth. But the majority and people are taking positions on that. The majority of us are well-intended, want to live wholesome fulsome lives and are committed to purpose, integrity, and doing the right thing. Where we're falling short is how do we, how do we in this age of, and this is the irony, the age of greater connectivity to everything than we've ever had, we've been profoundly distracted by that connectivity because it's not the right form of connectivity.
Harlan Loeb (45:25):
It's, it's transactional connectivity, it's momentary connectivity. It's like that. And I don't even know my kids use it where you can type something out and it disappears within 30 seconds. So nobody can trace it. We live in that world and I, but I do think Snapchat. Thank you. Um, so I do think that we need to, we kind of got to dig down and build community kind of, as I say locally, because I do think that we'll, we can get beyond this, but it will take a lot of effort, hold Congress today, you know, hold Congress accountable and to hold other institutions that are just going outside the lines, if you will, um, to hold them accountable- you can't laugh. In my mind, Purdue Pharma filed for bankruptcy to avoid litigation and to avoid accountability. Somebody has got to step in there and say, no, that's not happening. We're not going to allow it. That's not a, that's not a democratic society. That's not as civil society that allows a big company like that, that's made billions at the expense of a lot of people who've died from overdosing on opioids. That's not accountability. That's, that's arguably criminal behavior.
Eileen Rochford (46:41):
Well, I appreciate and applaud your glass half full perspective here and agree with you that we can dig deep here. Um, and there's, um, a brighter future ahead, but we all have to work together, like totally agree with you. And thank you for that perspective Harlan.
Harlan Loeb (47:01):
I think we have to believe in people and I don't know what choice we have and there in my life, I've been blessed and I'm certain you have to most of the people I know are people of integrity and purpose and conviction. And, and while we're all trying to delete lives in a very, very busy, disconnected environment, I think as we look at our kind of local institutions, whether they're religious or social, or, uh, educational professional circles, there's a lot of psychic income out there. A lot of, as my dad used to say, psychic income out there to keep us encouraged and keep us focused on, on those that are doing the right thing. Those are kind of that think and engage in ways that we're used to. I think it's a profound minority of our public that's driving, it always is, that is driving much like Europe in the, you know, in the 1930s and 40s, a very small public it's driving everything. And we need to address that.
Eileen Rochford (48:05):
Yes, we absolutely do. Well, thank you. This has been an extraordinary discussion on what I think all of us agree is this vital topic for C-suite executives and business leaders. They need to consider all of this when it comes to managing their companies through this really new set of value propositions that, um, have profound implications for all of us and for every organization. I'm Eileen Rochford, CEO of The Harbinger Group. Thanks for joining us for another episode of "Can You Hear Me?"
Rob Johnson (48:36):
And I'm Rob Johnson, president of Rob Johnson communications. Coming up on the next episode of "Can You Hear Me?" diversity equity and inclusion DEI. It's become a major focus of most corporations, but if you want to weigh in, what will you have to do to satisfy your customers, your clients, and your employees? We'll dig into that on the next episode of "Can You Hear Me?" We hope you'll join us then. And we thank you for joining us today.
Eileen Rochford (49:00):
And thank you for being with us Harlan.
Harlan Loeb (49:02):
My pleasure was a privilege. Thank you.